July 20, 2006

Positioning for extinction?

I just came across Laura Reis' post about why Weber should limit their brand name to charcoal grills (excluding gas) and I just have to disagree. Laura says:

Trying to cover all
the new emerging categories with one brand name will weaken your brand
in the mind of the consumer as new brands are launched by specialists.
Keep Weber as a
“charcoal” brand, period. And launch the gas grills with a new brand
name. Maybe even a new name for the portable gas grills...

After you build a leading iconic brand, the last thing you want to do
is undermine it with a line extension that goes against the core belief
of the brand... You build brands by being first. Weber was the first covered-kettle grill.

OK... so following that logic, the railroads were actually smart to think of themselves as being in the railroad business instead of the transportation business. And IBM was definitely wrong in putting the IBM name on PCs and services when mainframes became obsolete. And McDonald's was wrong to add salads to its menu because it goes against their "hamburger" positioning. Following this logic, there is no reason to launch line extensions and new products under the same brand name, regardless of changes in the market. Hmmm.

I guess I see things a bit differently. When you position your brand on what you do (charcoal, hamburgers, computers), it can only lead to extinction. Rather, base your positioning on how you do it (ie. a higher-level benefit), which allows you more flexibility over time. Google's brand position isn't search, it's organizing the world's information. Nike isn't shoes, it's passion. McDonald's isn't hamburgers, it's convenience.

And back to Weber. A quick search shows that while the grill industry is flat, shipments of charcoal grills are down 32% while gas grills are up 83%. The article states:

"Right now, grillers and barbecuers are looking for more convenience, more safety and more versatility. Because they are easier to use, LP gas grills have shown steady growth in sales
over the past few years. Most grill owners (55%) say their next purchase will be a gas grill as opposed to 29% who plan to buy charcoal grills."

So in a nutshell, Laura is suggesting that the Weber brand should just die out with charcoal grills.

The Weber brand is far bigger than charcoal. A more flexible position that's loaded with emotional attachment is tied to backyards and barbeques. As Laura noted, Weber's been around since 1952; there are a lot of collective backyard memories tied to Weber. That's where the brand equity lies... not in a lifeless piece of charcoal.

Mike, line extensions will work when there is little competition for the extension. For example, when Diet Coke came out, there was no competition, so it took off. However, line extensions erode the focus of the mother brand (original Coke) over time, and they too often fail when non-line-extended competition emerges (which has never happened in the cola category, as all cola makers make the same line extension mistake).

Serendipity is the leading strategy marketing/business people use to achieve success, simply because most of them don't know what their doing! So, whether they know it of not, their fate relies on luck.

The problem with Unreal is that it doesn't have a consistent character, story or game universe, especially between Unreal 1, Unreal 2 and the Unreal Tournament games. With Duke Nukem, we've maintained a consistent character and universe, so each Duke game is like a new James Bond movie, or a new episode of a TV show. Therefore, it's hard to call each Duke game a line extension. Is each new book in the Harry Potter series a line extension?

And you also asked about World of Warcraft. The Warcraft universe is like the Lord of the Rings universe or the Star Wars universe, ripe for the telling of many rich stories, in many media formats. I do not think of these as line extensions -- they are brand exploitations.

All this aside ... I'm still interested in the role of serendipity in successful products. There must be market successes that didn't use sophisticated marketing. I'd also be interested to hear about cases where line extensions have worked as there must be some of those as well. I ask because a totally black and white approach doesn't always work, given the failure rate of new products. What about line extensions that accentuate a brand, such as flavored vodkas?

I also wonder if market saturation plays a role in "branding failures". For example, while I would agree that GM poorly manages its brands, I can't imagine that fixing its brand management would help the company very much.

[Note to Scott: I do agree that Unreal is one of the worst, most line-extended brands in video games. I'm curious though: didn't 3D Realms successfully line extend the Duke Nukem brand with all those add ons?]

"In the marketing world, it's very clear to me that focus, creating new categories, specialization and differentiation are the keys to success."

You are absolutely right, Scott. Providing differentiated value, as the customer defines it, and communicating that value clearly and creatively is the key to marketing success. However, that is NOT what the word positioning describes. But let's simply agree to disagree. Our beliefs are similar. Our semantics are not. ;)

More important, I think positioning has definitely evolved over the decades, and referencing the older material may not be the best source. PR, for example, is the better way to launch a new brand, not advertising. Positioning is the best way to generate PR -- I do this all the time in my business. Free PR is easy when you've created a new category for your product. The press loves to cover leaders (versus followers). And positioning is all about being first in a category -- in fact, positioning is less about branding and more about creating new categories. When you create a new category, you are first in that category by default, and thus you are the category leader. Easy PR follows.

I've read all the Ries' books, and Trout books, along with maybe 200 other marketing books. Not to mention another 200 business books, all starting in the early-80's. In the marketing world, it's very clear to me that focus, creating new categories, specialization and differentiation are the keys to success. Everything else springs from these baseline considerations. All of this is positioning. I am sure that the creators of positioning would no longer agree that "building [an] image with mass market advertising" is the essence of positioning. Positioning is far more than spin, it covers every aspect of the brand.

The best positioned products have differentiation and compelling brand hooks built into the product's DNA, from concept through to PR. Positioning tells you, for example, to create a new brand when you enter a new category, and thus avoid line extensions. How many products would be better off just with this single facet of positioning? About one million!

"Positioning is not passe. Positioning is merely applied human psychology -- how can it be passe? The thing that trips the vast majority of people up about positioning is that they do not fully understand it. Seriously."

Scott, with all due respect, get a copy of Positioning and read it again. This is from Wikipedia.org:

"In marketing, positioning is the technique by which marketers try to create an image or identity in the minds of their target market for its product, brand, or organization. It is the 'relative competitive comparison' their product occupies in a given market as perceived by the target market."

The 1969 article "Positioning," and the subsequent book by the same name, suggests building this image with mass market advertising, and not with a differentiated business model.

Jennifer, 98 out of 100 marketers would have gone with PF Chang's Express or something similar that capitalized on the mother brand. (Or course, NONE of those 98 will admit to this now! But they are the same 98 that think all of Coke's line extensions are the way to go versus coming up with new brands. Or they're the same 98 that think Holiday Inn Express was a smart branding extension to the Holiday Inn mother brand, versus an entirely new name. On and on.)

Likewise, IBM would have been smart to create an entirely new brand for their original PC, rather than relying on an IBM brand extension. Back then, people thought of IBM as a mainframe computer giant. Many years after IBM lost the PC battle they finally answered the clue phone and created a new PC brand (can't remember the name--Google no help!), but it was too late, their competitors were too well established. Had IBM created a new brand for their PCs from day one, they might still be around today as one of the category leaders. People innately prefer category specialists -- one of the key principles of positioning that most people do not understand well. Dell and Compaq are clear category specialists in the PC space, while IBM is not (it's category specialty, at the time, was mainframes). This is why branding is all-important, as you want to create the perception that your product is a category specialist. People naturally prefer a specialist over a generalist. That's why line extensions are devastating to a brand, as they paint the mother brand as a generalist, and therefore people slowly but surely begin to look for a specialist alternative.

Scott, I would never recommend that PF Chang's launch a fast-casual concept under the same name. PF Chang's is an experience, not a type of food. The name sets an expectation and the minimum bar for the experience found inside. Pei Wei offers (IMO) a lower-quality food, a lower price point and a definite drop in overall ambiance and experience. While Pei Wei is fantastic according to fast-casual standards, it doesn't come close to PF Chang's standards. This is a perfect example of an appropriate use of brand focus.

Mike, do people ever tire of hearing about In-n-Out? Not that I've ever heard -- their fanbase is nearly fanatical. That's because In-n-Out has never wavered on their branding -- they've stayed true throughout. Coke, meanwhile, has become Shasta -- every flavor under the sun, everything to everyone, therefore nothing to anyone. They are a case study in endless positioning blunders. (Pepsi, too, btw -- Berry Pepsi or Crystal Pepsi, anyone! *giggle*)

If you look at long-term brands that have stayed true to their positioning for years and decades, then you'll find a brand people still love.

Rice wrote: "As Laura noted, Weber's been around since 1952; there are a lot of collective backyard memories tied to Weber. That's where the brand equity lies... not in a lifeless piece of charcoal."

Think about P.F. Chang's for a moment. An upscale Chinese chain built around quality, service and ambiance. A giant success in the restaurant industry. A few years ago PFC execs opened up another Chinese food chain, in the "fast-casual" segment of the industry, essentially serving a subset of the same menu, but at a lower service and price point, competing with other fast food chains.

Following Rice's logic, PFC stands for quality Chinese and should have leveraged their name for this new fast-casual chain of restaurants. Thank goodness the execs at PCF knew about positioning, though! And they wisely created an entirely new brand for this new chain (think Toyota & Lexus), and named it Pei Wei. That's because they correctly determined that the branding for PFC would have been diluted had they gone with what most marketers would have proposed: PFC Express, or a similar line-extension to the mother brand.

Pei Wei has turned into THE super sensation of the fast-casual segment. It did not need the PFC brand attached to it -- in fact, doing so would have hurt it in the long run because brands are stronger when they have a narrow, focused identity (think In-n-Out).

Too many people in business or in marketing seem to have the impression that's it's too difficult to create a new brand, when you can piggy back on an existing one. And that's why we have 100 variations of Coke, which naturally has tired us out because we can't figure out what Coke stands for anymore.

Company's would be much smart if they looked to create new brands more than created brand extensions. But it's because they are not smart that huge established companies like IBM, with all the money in the world, fall prey to better positioned, highly focused upstarts like Dell, Gateway, and Compaq.

(Note to Mike: Unreal is a tired brand because it's one of the worst managed brands in the game industry, with too many line extensions. What exactly does Unreal stand for? I think you see my point.)

Positioning isn't dead. But even with great positioning and even if a brand avoids line extensions, brands like Coke wear out. I'm tired of Coke. I'm tired of hearing about Coke. It's the same in video games. I'm tired of Unreal. I'm tired of hearing about Unreal. I'm also tired of hearing about Microsoft. Some companies have such large marketing budgets that their advertisements - and even their PR - seems like endless repeats of a television show. Sure, I'll watch a rerun, but I don't want to watch reruns forever.

Ever dated someone who called too much? Some of these brands simply need to give the consumer some space. It would be really interesting if some of these huge brands simply shut up and stopped advertising for a while. I sort of think line extension is like the guy or gal who calls too often, always with a "valid" reason to call. Line extensions are just a reason to run a big advertising campaign or whatever, and "remind" the consumer that the brand exists. This of course, has occured on a truly epic scale within human culture.

Positioning doesn't matter once consumers become tired from the constant barrage of helpful reminders.

"In Chapter 4 of my new book, A Clear Eye for Branding I say that positioning is passe:"

Positioning is not passe. Positioning is merely applied human psychology -- how can it be passe? The thing that trips the vast majority of people up about positioning is that they do not fully understand it. Seriously.

I understand it better than most, and have built a $100 million business using it as my guide post. In fact, we just released a new video game product this month (Prey) that is the best selling game worldwide. It's success is based on positioning, from the concept, through to the end-marketing.

If you disagree with positioning, it merely means you do not understand it fully, or that you misunderstand it.

IBM was, in fact, wrong for putting their name on PCs, and that's why the largest computer company in the world (at the time) failed in the PC market, versus far better positioned competitors like Dell and so on, whom didn't even exist at the time of the IBM PCs release. Had IBM had a clue, they would have created a new brand/category for their PC. Oops. Dell is laughing all the way to the bank.

McDonald's, too, is wrong for selling salads. The leading unit-vs-unit burger chain is In-n-Out, and all they serve is burgers, fries, sodas and shakes. That's it! For 40+ years. They have remained totally focused on burgers, positioned as a burger specialist, and the beat the Mac Shack on a unit-vs-unit basis, revenues-wise. Had McD's had a clue about positioning, they would have not expanded their menus, either.

I don't know Weber well enough to comment. But if people think of Weber as a charcoal grill maker, then Weber is making a positioning mistake by expanding their brand into electric grills or whatever. They should instead do what Black&Decker did and create a new brand (DeWalt) for their non-charcoal grills. Or, do what Levi's did (created Dockers, after many failed attempts trying to sell upscale casual pants with the Levi's name).

How many products does Coke slap their name on that fail? What does Coke stand for any more? Hell if I know? If any company is clueless about positioning, Coke is it.

Welcome back Jennifer. Great post. I agree completely. In Chapter 4 of my new book, A Clear Eye for Branding I say that positioning is passe:

"We're living in a marketplace driven by creativity and innovation. The concept of branding is a much more dynamic idea. Standing still and trying to persuade people with clever advertising and image-building campaigns is a self-centered waste of time and money."

I think that the Weber Brand is about the end product, great grilled food. The Brand is definitely bigger than charcoal. Just as Google "organizes the world's information" and Nike is passion, Weber whether it is a charcoal grill or a gas grill produces the greatest tasting results. Why? Because a Weber grill, whatever produces the fire, is designed for excellent results. Weber also has grilling utensils and even a restaurant.I think gas vs charcoal is irrelevant to the Brand definition and they would be foolish to choose a make their brand about something so low interest...the interesting part is the best tasting food, because of the highest quality design, whatever your fire producing preference is.

"Mack, I didn't mean to imply that grills were a fast-moving category. I am simply using this example to make a point that tying a brand to a narrow product leads to extinction. Consumer products take longer than technology products to become extinct, but eventually it will happen. By attaching other attributes to the brand, it will give you more flexibility when the product matures and declines. And the longer you can extend your brand, the more collective emotional history you gain (hence why Coca Cola is such a strong brand... as well as GE, even though they've migrated into a variety of unrelated products including high-end kitchen appliances.) Actually I think this merits a follow-up post..."

Yes but you can't always extend a brand as you are suggesting. Sometimes it works, but if it doesn't, then you've diluted the brand, and you're worse off than you were before.

Case in point: Do customers see Weber as the company that produces great grills, or being the company that's been the source of backyard memories since 1952? Should Weber concentrate on grilling, or extend to produce bug zappers, lawn furniture, heck why not lawn care and pesticides? After all, furniture and a beautiful backyard can definitely add to those 'backyard memories'.

I understand the point that you are making, and I agree that sometimes it's better to extend your brand to cover the 'experience' rather than just confine it to a narrow product category.

That presumes that they were successful in their launch of a new brand. Toyota/Lexus is everyone's favorite example because it worked. But one of the reasons it worked is that there was clear differentiation between the market Toyota served and the luxury market niche in which Lexus was positioned AND that the market image of Toyota would never have been accepted in that niche. I'm not sure either factor applies in the Weber case

Rick, I'm in your camp. When you think of grill, you think of Weber. There will come a day when new technology will enable a much cleaner, more convenient way to grill than either charcoal or gas... so will that mean that Weber will need to launch a 3rd brand name? Even if that doesn't happen, why on earth would Weber toss out 50+ years of brand equity to create a new brand within the grilling category? Building a new brand is a huge expense.

Mack, I didn't mean to imply that grills were a fast-moving category. I am simply using this example to make a point that tying a brand to a narrow product leads to extinction. Consumer products take longer than technology products to become extinct, but eventually it will happen. By attaching other attributes to the brand, it will give you more flexibility when the product matures and declines. And the longer you can extend your brand, the more collective emotional history you gain (hence why Coca Cola is such a strong brand... as well as GE, even though they've migrated into a variety of unrelated products including high-end kitchen appliances.) Actually I think this merits a follow-up post...

Hmm... It seems to me that Weber would want to position themselves as a grill company. That is, when you think of grills, you think Weber.

But...type of fuel doesn't matter... Weber = grill and grill = Weber. When people think "I need a new grill" the image they have is of a Weber, regardless of whether they envision a gas or charcoal grill. Grill accessories (mitts, tongs, charcoal chimneys) all work within this since they're essentially grill appendages. To confine themselves to the charcoal grill segment of the grill market is, as you point out, corporate suicide.

This might seem equivalent to the backyard experience positioning, but I don't think it is... citronella candles and bug zappers are also part of that experience, as is furniture, etc... but I don't see Weber successfully extending their brand to those things.

"If you want to stay relevant over time in a fast-moving category, it's imperative that you employ a positioning that transcends your product(Apple's "think different" comes to mind.)"

Yes but are grillers a 'fast-moving category'? And again, Laura's original point was that Weber made its name as a 'charcoal' grill, and that grillers are particular about the type of grill they will use. She claimed that Weber's positioning was as a charcoal griller, not as a 'backyard experience' product.

IMO, in order to disprove Laura's particular assertion, you need to show that Weber's gas grills are selling well. If you can, that tends to undermine her position that Weber should stick with charcoal.

If you cannot, then Laura's position seems valid.

I guess the key question here is, when the average customers thinks of 'Weber grills', do they think 'That's a great charcoal grill!', or 'That's a great product to enhance my backyard grilling experience!'.

I tend to think it's the former rather than the latter, and I think that was the genesis of Laura's post. Now again to your point here: "If you want to stay relevant over time in a fast-moving category, it's imperative that you employ a positioning that transcends your product(Apple's "think different" comes to mind.)"

I would tend to agree, but I don't think that backyard grillers would qualify as a 'fast-moving category'.

The Reis analysis would seem to suggest that General Electric's brand should have been limited to things that were primarily electrical, and that other brand names should have been used for things like jet engines and financial services. Obviously, this would not have been a correct conclusion.

Speaking of GE--Jennifer, I've been kind of surprised by GE's success in very-high-end kitchen appliances. I would have thought that the GE brand implied reliability, integrity, and innovation, but not necessarily high style, and that the kind of people who buy very expensive appliances would have wanted something with a different (probably European) name.

(laughing)Mack, thanks for finding the date on that article! I looked for it before posting but as I said, I just did a quick search. I found a couple newer stats that say that while gas grills are the favorite due to convenience (with 66%+ of hhs using it) charcoal is making a comeback. My point still stands, though: tying a brand position to a product can still lead to extinction (especially considering the law of accelerating returns... http://www.kurzweilai.net/). Perhaps it's easier for a non-technology brand to stay relevant longer, but certainly not for any products in the technology space; things change too quickly. If you want to stay relevant over time in a fast-moving category, it's imperative that you employ a positioning that transcends your product(Apple's "think different" comes to mind.)

Also... Whether or not McDonald's sells salads or doesn't sell salads has very little to do with whether or not McDonald's is about convenience or about hamburgers. We could speculate on the importance of the hamburger position or we could simply imagine McDonald's without hamburgers or without french fries. I think the hamburger position is very important. The french fry position is probably equally important. Perhaps not to everyone but certainly to most of their market.

I think this discussion misses an important point: what works for one company often does not work for another. There are so many exceptions, flukes, and other serendipitous events in business that it can be tough to sort out the why and how. It's up to each company and brand to find the mix of concepts that work for their brand. For some products, positioning is extremely effective and/or an utter necessity. For other products ... no one cares about its position relative to competition. There are tried and true methods for just about everything but even the tried and true doesn't work for everyone. This explains why so often, "me too" is often useless.

"And back to Weber. A quick search shows that while the grill industry is flat, shipments of charcoal grills are down 32% while gas grills are up 83%. The article states: "

Time-out!

First of all, the article you are referencing states a few sentences below the portion you quoted that, "Following is a categorized list of features and products that grill manufacturers are incorporating to increase sales for 1997."

So that article appears to be TEN years old. Yikes.

Second, even assuming that the data from 1996 is still applicable in 2006, that still doesn't tell us how sales of WEBER grills are doing. Are they up? Down?

If sales of Weber gas grills are up, then that tends to support your theory that Weber grills are positioned based more on 'behavior' rather than type.

But again, we have no idea, since this article doesn't specify, and even if it did, it would be meaningless, since the data is apparently at least 10 years old.

Spot on! Many companies get carried away by their "brand" and they forget to continue to look at their core competency. Sometimes this is hard to comprehend ... like you say, McDonald's is about convenience, not burgers. It is core competence that creates the unique difference in the first place ... and the great product/service story is what everyone talks about -- this is what should drive your brand story. Not the other way around.

I agree with your point about brand elasticity in general. However, the railroad point, although commonly made, is dubious, in my not-so-humble opinion. See Mike Hammer's thoughts, and mine, on the strategic alternatives that faced buggy-whip manufacturers.
http://photoncourier.blogspot.com/2004_11_01_photoncourier_archive.html#110047913727443449

As a pretty good chef, the Weber name to mean meant innovation. I had a kettle for years. I now own a Weber gas grill that cost about $30 more than similar name models with similar BTUs.

But the one thing about the Reis post that intrigues me... I need to figure out how I too can throw my own asinine marketing philosophy out into the wind and make money at it. So far it's been a loser for me ;0

Awesome! A successful business has to focus on something larger than what they do. For me, Weber is about good food and good times - nothing near charcoal. (The railroad example was perfect...I might steal it for personal use.)

Jennifer, you hit the nail... It would be especially silly given that the fact that more consumers associate Weber with gas grills than they do charcoal. I'm pretty big into BBQ'ing and when I think of Weber I think of barbeques in general, not just charcoal.

Another good example would be a musician who changes their style with the times. It's usually a smart move but it does piss off a lot of the die-hards.

I recently finished Positioning: The Battle for Your Mind, and while I have enormous respect for the Reis duo, I did notice a heavy emphasis on the "what you do" positioning theory in the book, and it raised similar questions with me. I appreciate your idea of positioning based on "how you do it." I think that if "how..." is a foundational element in one's positioning plan, previously blurred lines become very clear. Thanks for the qualification.